Third Frontier again may aim at bigger grants

<i>Investments could better create, attract
jobs</i>

The Ohio Third Frontier Commission wants to start making big grants again.
The next annual budget for the Third Frontier program — an initiative designed to boost Ohio's economy through investments in technology — could include $50 million set aside for larger projects designed to help the state establish itself as a strong player in various technology sectors, said Norm Chagnon, deputy chief of Ohio's Office of Technology Investments.
The commission's goal is to fund more projects like the Cleveland-based Global Cardiovascular Innovation Center, said Dr. Chagnon, who credited the Cleveland Clinic-led center with helping launch several health care-related startups.
The commission has yet to approve formally its proposed $236 million budget for calendar year 2013. However, at the group's monthly meeting last week, it voted to approve the general direction of the Third Frontier program, said Dr. Chagnon, whose office is part of the Ohio Development Services Agency.
The agency, which until recently was called the Ohio Department of Development, allotted $50 million for larger Third Frontier investments because multiple commission members have voiced support for the idea of backing bigger projects.
“They were for (making) a large, game-changing investment,” he said.
The smallest grant the commission likely would make under its new Technology Commercialization Cen-ters program would be around $10 million, though the commission also could decide to give all $50 million to one project — if the right one comes along, Dr. Chagnon said.

The Wright stuff

The program would bear a resemblance to the Wright Centers of Innovation Program. Through the Wright Centers program, the Third Frontier Commission in its early years awarded grants ranging from $11 million to $28 million to 13 groups of collaborators. The groups — which consisted of colleges, businesses, hospitals and other research institutions — submitted plans stating how they would work together to commercialize new technologies.
The commission also made one $60 million grant in 2006, to the Global Cardiovascular Innovation Center, which it labeled a “Wright Mega-Center of Innovation.” Today, the cardiovascular center's 50,000-square-foot headquarters, located on Cedar Avenue across from the Cleveland Clinic, houses several young companies commercializing biomedical technologies.
The cardiovascular center claims to have created, attracted or capitalized 40 companies and supported the creation of 500 jobs in Ohio, according to a recent report it provided to the state. That project will serve as a model for the Technology Commercialization Centers program, Dr. Chagnon said.
“What appealed to us is how many startup companies were created out of the GCIC,” he said.
However, the new program would differ from the Wright Centers program in a few key ways.
For one, the new initiative, if approved, would focus on developing technologies that could be turned into products fairly quickly, Dr. Chagnon said. Some previous Wright Center projects focused on opportunities that were “further from the market,” he said. Thus, according to metrics used by the commission, the Wright Centers program hasn't created as many jobs as some other Third Frontier programs that focus on near-term opportunities.
Plus, the Wright Centers program focused on physical infrastructure because its grants typically included state dollars reserved for capital improvement projects. The Technology Commercialization Centers program wouldn't have that limitation.

Changes afoot

The proposed budget also would make a few other changes:
n It would set aside $15 million for companies and other organizations that want to create “a critical piece of infrastructure that could be shared,” Dr. Chagnon said. For instance, the commission last week awarded $6 million to Honda, which will use the money to resurface a high-speed test track that could be used by other auto-makers or even the government. That grant provided “a perfect example” of how another new program — the proposed Technology Asset Grants program — would work, he said.
n The budget included $1 million for marketing, an amount that commissioners are thinking about increasing, Dr. Chagnon said. Though the state of Ohio for years has promoted the Third Frontier through the media, the commission wants to do more traditional marketing to attract investors, entrepreneurs and companies to the state, he said.
n The budget scrapped two programs that never got off the ground: a $10 million Growth Fund that would have gone toward the creation of investment funds designed to help more established tech companies scale up, and a $1 million Micro Loan Fund, which would have targeted smaller projects.
Demand for the Growth Fund dollars dried up because the money was to be awarded in conjunction with grants from a similar federal program; investors have had trouble accessing the federal money, Dr. Chagnon said. The Micro Loan Fund was nixed because it wasn't a big priority — and because the Third Frontier already has “an awful lot of programs on the books,” he said.